European Regulators Levy $1.24B Fine Against Qualcomm

In a statement issued Jan. 24, EU regulators alleged that by granting Apple an exclusive deal between 2011 and 2016, Qualcomm (Nasdaq: QCOM), abused its dominant market position in smartphone components called LTE baseband chips.

Qualcomm said it “strongly disagrees” with the decision and that it will appeal the fine.

“Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance,” said a statement from Commissioner Margrethe Vestager, who is in charge of competition policy.

“Qualcomm paid billions of U.S. dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price; they were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads. This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm’s behavior denied consumers and other companies more choice and innovation — and this in a sector with a huge demand and potential for innovative technologies. This is illegal under EU antitrust rules and why we have taken today’s decision.”

“We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers,” said Don Rosenberg, Qualcomm’s general counsel. “We have a strong case for judicial review and we will immediately commence that process.”